Quick Answer
Customer acquisition cost, or CAC, is the total cost of acquiring one paying customer. It includes advertising spend plus the cost of the sales work required to convert an inquiry. CAC is only meaningful when compared with the gross profit a customer produces.
The definition
CAC is total acquisition cost over a period divided by the number of customers acquired in that period. The mistake most businesses make is including only media spend and ignoring the cost of answering, quoting and closing.
CAC has no meaning by itself
A four-hundred-dollar CAC is excellent for a system replacement and catastrophic for a drain cleaning. The relevant comparison is against gross profit per customer, and for recurring services, against lifetime value.
Why lead cost is not a substitute
Cost per lead multiplied by an assumed close rate is a guess. Real CAC comes from counting the customers who actually paid.
Recurring revenue changes everything
In maintenance, cleaning and pest control, a customer may pay for years. Judging CAC against the first invoice will make profitable acquisition look unaffordable.
How Furlan Systems applies this
We fund and operate this work directly: capital, advertising, technology, follow-up, sales and closing. Operating partners provide capacity, operations, fulfillment and customer experience.